2006/744/EC: Commission Decision of 8 March 2006 on the State Aid implemented by Germany for Magog Schiefergruben GmbH & Co. KG (notified under document number C(2006) 641)   (Text with EEA relevance)
Date: 2006-03-08
Institutions: European Commission
Subjects: Germany, North Rhine-Westphalia, State aid, building materials, building technique, control of State aid, earths and stones

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COMMISSION DECISION

of 8 March 2006

on the State Aid implemented by Germany for Magog Schiefergruben GmbH & Co. KG

(notified under document number C(2006) 641)

(Only the German text is authentic)

(Text with EEA relevance)

(2006/744/EC)

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

Having regard to the Treaty establishing the European Commu-
nity, and in particular the first subparagraph of Article 88(2)
thereof,

Having regard to the Agreement on the European Economic
Area, and in particular Article 62(1)(a) thereof,

Having called on interested parties to submit their comments
pursuant to the provisions cited above (1) and having regard to
their comments,

(4) Germany's

the formal
response to the initiation of
investigation procedure was submitted by letter dated
6 December 2004, registered as received on 13 December
2004. The Commission requested further information on
5 October 2005, which Germany submitted by letter dated
15 November 2005, registered as received on 16 November
2005. The annexes were submitted by letter dated
18 November 2005, registered as received on 24 November
2005. Germany submitted additional information by letter
dated 21 December 2005, registered as received on the
same day.

II.

DESCRIPTION OF THE AID

Whereas:

2.1. The recipient

I.

PROCEDURE

(5)

(1) On 12 November 2003,

the Commission received a
complaint concerning alleged state aid for Schiefergruben
Magog GmbH & Co. KG (‘Magog’)
from a German
competitor of Magog. The Commission requested informa-
tion from Germany on 25 November 2003, which
Germany submitted by letter dated 4 March 2004,
registered as received on the same day.

The recipient, Magog, which is based in Bad Fredeburg,
North Rhine-Westphalia, is active in the production of slate.
In 2002 the company had 43 employees and a balance
sheet total of below EUR 5 million. As the independence
criterion is also met the company qualifies as a small
company as defined by the Commission Recommendation
of 6 May 2003 concerning the definition of micro, small
and medium-sized enterprises (3).

(2) On 6 October 2004 the Commission initiated the formal
investigation procedure with respect to the alleged state aid.
The Commission decision to initiate the procedure was
published in the Official Journal of the European Commu-
nities (2). The Commission invited interested parties to
submit comments on the presumed aid. Comments were
submitted by letter dated 14 December 2004, registered as
received on 16 December 2004, from Rathscheck Schiefer
I.B. Rathscheck Söhne KG
und Dach-Systeme KG,
GmbH
Moselschiefer-Bergwerke
and
(‘Rathscheck and Theis-Böger’)
letter dated
7 December 2004, registered as received on 13 December
2004,
third party that wished to remain
anonymous.

Theis-Böger
and by

from a

(3)

The comments were transmitted to Germany by letters
dated 3 January 2005 and 7 July 2005. Germany replied to
the comments by letters dated 11 March 2005, registered as
received on the same day, and 31 August 2005, registered
as received on 1 September 2005.

2.2. The project

(6) At the request of the Westfälischer Schieferverband e.V.
(Westphalian State Federation) the Land of North Rhine-
Westphalia supported a project for the development of a
new system for the cutting of roofing slate (project title:
‘development and testing of digitally controlled and robot-
supported roofing slate production’) in 2002 and 2003.
The project was carried out by Magog, which is a member
of the Westfälischer Schieferverband, in collaboration with
a university of applied science.

(7) According to Germany the objective of the project was the
development of an innovative technology for the treatment
of roofing slate in order to reduce health risks for the
employees. Up to then the treatment of roofing slate was to
a large extent manual work, which resulted in a physical
burden for the employees. Germany claims that the project
has contributed significantly to an increase in occupational
safety and as such serves as a model for the whole roofing
slate industry.

(1) OJ C 282, 19.11.2004, p. 3.
(2) See footnote 1.

(3) OJ L 124, 20.5.2003, p. 36.

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(8) According to the application, the project ‘development and
testing of digitally controlled and robot-supported roofing
slate production’ consisted of three stages. In a first stage a
prototype was to be developed. The second stage foresaw
the construction of a hall, which was to be followed by the
implementation of the new technology as a third stage.

(9) Only the first stage was subsidised by the Land of North
Rhine-Westphalia. Originally the costs for the first phase
were estimated to amount to EUR 1 293 110 and the Land
of North Rhine-Westphalia was to finance 60 % of these
costs, i.e. EUR 775 866. In the end the eligible costs of the
first
stage amounted to EUR 1 223 945, of which
EUR 702 093 (57 %) were financed by the Land North
Rhine-Westphalia.

(10) The final costs of the first stage can be further broken down

as follows

Table 1:

Feasibility study

Development of a prototype (installa-
tion 1)

Development and construction of two
installations for production (installa-
tions 2 and 3)

EUR

25 565

464 410

733 970

TOTAL

1 223 945

(11) Magog commissioned a feasibility study for the develop-
ment of a digitally controlled and robot-supported
installation for the production of roofing slate, which was
delivered in March 2002. The costs of the study amounted
to EUR 25 565.

(12) Following the feasibility study, a prototype, which was not
designed for commercial production but only for testing
purposes, was developed and constructed on the premises
of Magog (installation 1). Testing took place in November
and December 2002; the prototype was dismantled in
January 2003. The costs of the prototype amounted to
EUR 464 410.

(13) On the basis of the experience acquired through the testing
of
the prototype the company proceeded with the
construction of an installation designed for commercial
production. The tests with the prototype had shown that at
least two installations would be necessary for commercial
production because of the different sizes of the roofing
slate. The first
installation which would be used for
commercial production was set up in January 2003
(installation 2), the second in April 2003 (installation 3).
Continued testing of both installations 2 and 3 took place
in 2003 to further improve their operation. Since the
beginning of 2004 the production process has been
running smoothly on installations 2 and 3. The costs of
installations 2 and 3 amounted to EUR 733 970.

(14) Stage 1 described above in paragraphs 8 to 13 was part of
an overall plan to modernise the production process of
Magog and comprising further stages. Stages 2 and 3
started in 2003 and were finalised in 2005. Moreover, since
2002 continued investments have taken place in the field of
slate extraction (tunnelling). According to the information
submitted by Germany, stages 2 and 3 and tunnelling
comprised the following investments which were part of
the overall modernisation plan

Table 2:

1

2

3

4

5

6

7

8

9

10

11

12

Hall 2002

Hall 2005

Sawing machine

Water treatment

Office connection

Digging device

Costs for patents

Tunnelling 2002 — 2005

Tunnelling 2006 — 2007

Wages for project leader and engi-
neer 2004/2005

Demolition of old building

Architect's fee

EUR

16 576

213 175

267 774

35 740

2 570

105 840

65 128

557 378

176 800

84 247

8 245

5 733

TOTAL

1 539 205 (1)

(1)

Figures do not add up because of rounding.

(15) The indicated costs of EUR 16 576 for ‘hall 2002’ concern
the repair and renovation of an existing sawing hall in 2002
(point 1 in Table 2).

(16) The investments in ‘hall 2005’ concern a former storage
hall which was significantly modified in 2004 and 2005
and is now used for production (point 2). The conversion of
the hall became necessary for the implementation of the
new production process on the basis of
the newly
developed robots. The modification of the hall also includes
the construction of a new sawing machine (point 3) which
became necessary for the installation of the new robots.

(17)

In order to implement the new production process the
construction of new water treatment facilities was also
necessary for the cooling of the new sawing machine (point
4). The new sawing machine is bigger than the old one and
consequently also needs more water. The costs for office
connection (point 5) are also linked to the investments in
the hall 2005 and the sawing machine.

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(18) The digging device (point 6) is a machine which is used for
the cutting of the slate in the mine and was acquired by
Magog in 2004.

(19) The costs for the patents as presented under point 7 above
are the lawyers' fees for the notification of the patents
linked to the project.

(20) As regards tunnelling 2002 to 2005, the related costs are
for investment in extending the mine (point 8). The costs
for tunnelling 2006 to 2007 are the estimated costs to the
company of extending the mine in these two years (point
9). The costs for project leader and engineer 2004/2005
(point 10) are linked to the mining activities mentioned
under point 8 and 9.

(21) The costs for the demolition of the building (point 11) were
incurred in July 2005 and concerned the demolition of an
unspecified building.

(22) The architect's fee (point 12) can be further broken down
into EUR 3 600 for the construction of ‘hall 2005’ and
EUR 2 133 for other items.

2.3. The financial measure

(23) The Land North Rhine-Westphalia provided a grant of
EUR 702 093 on the basis of the ‘Technologieprogramm
Bergbau’ (technology programme for mining). The objec-
tive of this programme was to promote projects to improve
safety and health protection of employees in mining as well
as projects to improve environmental protection in the field
of mining. Potential aid recipients under this programme
were joint technological research institutes. The programme
was discontinued at the end of 2003.

(24) The grant decision was taken on 19 December 2001. The
subsidy was paid out in several instalments between August
2002 and December 2003 as the project progressed.

(25) Magog has all property rights to the results of the project
and owns the licences. It has to transfer to the Land North
Rhine-Westphalia part of
the proceeds which it will
potentially generate from the property rights and licences.
The grant decision contains provisions to ensure that the
results of the project are widely disseminated. Magog is
required to publish the results in at least one acknowledged
German professional journal. According to the information
submitted by Germany, Magog has licensed some patents to
a competitor. An article on the results was published in the
mining association's journal entitled ‘Bergbau’ (‘Mining’).

III.

GROUNDS FOR INITIATING THE FORMAL

INVESTIGATION PROCEDURE

constitute state aid, as claimed by Germany. The Commis-
sion considered that
the financial measure provided a
selective advantage to Magog as the introduction of the new
technology increased the productivity of the company and
improved its competitiveness without the company having
to bear all its cost. The Commission also considered that
trade among Member States was affected.

(27) As regards potential exemptions under Article 87(3) of the
Treaty, the Commission first noted that Magog was not
located in an assisted area pursuant to Article 87(3)(a) or (c)
of the Treaty.

(28) The Commission considered that the project might qualify
as an investment project within the meaning of Commis-
sion Regulation (EC) No 70/2001 of 12 January 2001 on
the application of Articles 87 and 88 of the EC Treaty to
state aid to small and medium-sized enterprises (4), but
doubted that the permissible ceilings of up to 7,5 % gross
aid intensity of the eligible investment cost for medium-
sized enterprises and up to 15 % gross aid intensity for
small enterprises were complied with.

(29) The Commission also considered that part of the project
might potentially qualify as a precompetitive development
activity under the Community framework for state aid for
research & development (5)
(‘R&D framework’), which
allows
industrial
state aid for
research and precompetitive development. However, the
Commission doubted that the maximum allowable aid
intensity of 35 % for small and medium-sized enterprises
(SMEs) was complied with.

fundamental

research,

(30) The Commission also pointed out that it would examine
the compatibility of the aid with the common interest in
general, and in particular with the objective of
the
protection of workers' health and safety, as set out in
Article 137 of the Treaty.

IV.

COMMENTS FROM INTERESTED PARTIES

(31) The Commission received comments from Rathscheck and
Theis-Böger and from a competitor that wished to remain
anonymous.

4.1. Rathscheck and Theis-Böger

(32)

the formal
In their comments on the initiation of
investigation procedure Rathscheck
and Theis-Böger
explain that the roofing slate market constitutes one single
market and that there is no separate market for ‘Altdeutsche
Deckung’ (‘old German’ style roofing). Even if ‘Altdeutsche
Deckung’ were a separate market, the subsidy would still

(26) The Commission initiated the formal investigation proced-
the financial measure did not

ure as it doubted that

(4) OJ L 10, 13.1.2001, p. 33.
(5) OJ C 45, 17.2.1996, p. 5.

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lead to distortions of competition as the new robot could
also be used for the production of commodity slate and as
Spanish slate producers compete not only in the market for
the final product, but also in the market
the
intermediate product. Rathscheck and Theis-Böger point
out that they increasingly produce ‘Altdeutsche Deckung’
from Spanish raw slate.

for

(33) As regards potential compatibility of

the aid with the
common market, Rathscheck and Theis-Böger argue that
the aid is not compatible because it allows Magog to offer
its products on the market at prices below those of its
competitors and even below those of Spanish companies.

V.

COMMENTS FROM GERMANY

(39)

that

In its comments to the initiation of the formal investigation
procedure Germany argues
the grant does not
constitute state aid as trade between Member States is not
affected. The slate which Magog produces with the newly
developed installation is a special high-quality roofing slate,
the so-called ‘Altdeutsche Decksteine’. The market for this
slate is a regional market and is limited to certain areas of
Germany. There is thus no effect on trade between Member
States.

(34) Rathscheck and Theis-Böger reject Germany's argument
that the subsidy did not provide an advantage to Magog.
Magog itself would not conceal that the subsidy contributed
to a significant increase in its profitability.

(40)

(35) Rathscheck and Theis-Böger also provide background
information on the market for roofing slate. They point
out that total production of roofing slate in the EU has
decreased since 2001. Spain accounts for 95 % of EU
production and is the only country with a significant export
surplus. All EU producers of roofing slate are small and
medium-sized companies.

(36) Rathscheck and Theis-Böger argue that the development of
digitally controlled, robot-supported roofing slate produc-
tion does not constitute a real
innovation. Commodity
roofing slate has been produced with the help of highly
modern machines for several years in Spain. As regards the
classification of part of
the project as precompetitive
development, Rathscheck and Theis-Böger point out that in
any event the allowable aid intensities are not complied
with.

the aid led to an improvement of

(37) Rathscheck and Theis-Böger reject Germany's argument
that
the working
conditions of the employees. They argue that the aid cannot
therefore be considered compatible with the common
market on the grounds that it pursues the objective of the
protection of workers' health and safety as set out in
Article 137 of the Treaty.

4.2. Competitor that wished to remain anonymous

In the event that the Commission considers that trade
between Member State is affected, Germany argues that the
grant can be considered compatible with the common
market on the basis of Article 87(3)(c) of the Treaty. The
measure fulfils the conditions of a study preparatory to
precompetitive development activities within the meaning
of point 5.4 of the R&D framework and of a precompetitive
development activity of a small enterprise. In addition, the
aid could be considered compatible with the common
market directly on the basis of Article 87(3)(c) of the Treaty.
to the achievement of an
The measure contributes
important Community objective laid down in Article 137
of the Treaty, and it concerns an economic activity for
which in so far as competition is affected at all, there is no
competition at Community level. Moreover,
intense
Germany submits a detailed description of the project,
information on the project costs and the SME status of the
company.

(41)

In its response to the comments of Rathscheck and Theis-
Böger, Germany reiterates its position that trade between
Member States is not affected. Germany points out that
there is
intense competition in the regional market.
Germany explains that the implementation of the project
did not lead to a reduction in the production costs of
Magog. Moreover, Germany points out that the project is
eligible under the R&D framework and that the aid can be
considered compatible on this basis. Germany expresses
doubts as regards the correctness of
the statement by
Rathscheck and Theis-Böger that they produce ‘Altdeutsche
Deckung’ from Spanish raw material.

(38)

that

In its comments to the initiation of the formal investigation
procedure the competitor that wished to remain anon-
ymous points out
the German construction and
roofing market has been declining in recent years. The
provision of a subsidy to a German producer would
therefore be particularly harmful. The competitor also states
that it produces raw slate used for the production of
‘Altdeutscher Schiefer’ in Germany.

(42)

In its response to the comments of the competitor that
wished to remain anonymous, Germany explains that the
subsidised robot will not be used for the production of
commodity slate that
in Spain. There is
therefore no distortion of competition with respect to
Spanish slate. The statement by the competitor that wished
to remain anonymous that it produces slate which is used
in Germany for the production of ‘Altdeutscher Schiefer’ is
not in Germany's view correct.

is prevalent

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VI.

ASSESSMENT

6.1. Existence of aid within the meaning of Article 87

(1) EC Treaty

(43) According to Article 87(1) of the Treaty, any aid granted by
a Member State or through State resources in any form
whatsoever which distorts or threatens to distort competi-
tion by favouring certain undertakings or the production of
certain goods shall, in so far as it affects trade between
Member States, be incompatible with the common market.
Pursuant
the European
Courts, the criterion of trade being affected is met if the
recipient firm carries out an economic activity involving
trade between Member States.

to the established case law of

(44) The Commission considers that the project and the grant
by the Land North Rhine-Westphalia did confer an
advantage on Magog. The grant supported the company
in modernising its production process by setting up new
installations. This is confirmed by the company's own
website, which states that the project was carried out to
automate the cutting process, which would allow the
company to produce high-quality slate at lower cost and
would thus increase the competitiveness of the company.
The grant favours Magog as the company would not have
obtained the grant on the market. It therefore threatens to
distort competition.

(45) As regards the question of the effect on trade between
Member States, the Commission considers that the special
high-quality roofing slate that Magog produces does not
constitute a separate market but is part of the market for
roofing slate. According to Germany the production and
distribution of ‘Altdeutsche Deckung’ is limited to certain
regions and there is no demand side substitutability of
‘Altdeutsche Deckung’ by commodity roofing slate because
of its cost and utilisation. Nevertheless, the Commission
considers that the fact that ‘Altdeutsche Deckung’ is more
expensive than commodity roofing slate and is only
demanded by certain consumers with a special historic
interest does not justify considering it a separate market.

(46) According to the complainant the total production volume
of roofing slate amounts to an estimated 743 000 tons in
the EU. Spain is by far the largest producer of roofing slate
and exports a significant part of its production. Germany
produces around 9 000 to 10 000 tons of roofing slate.
According to Germany Spanish imports of roofing slate
into Germany amounted to more than 100 000 tons in
2002. The Commission thus comes to the conclusion that
there is trade between Member States in the market for
roofing slate and that Magog is in competition with
producers from other Member States.

(47) The measure is provided by the Land North Rhine-
thus stems from state resources and is

Westphalia.
attributable to the state.

It

(48) On the basis of the above the Commission concludes that
the grant constitutes state aid within the meaning of
Article 87(1) of the Treaty and its compatibility with the
common market has to be assessed accordingly.

6.2. Derogations under Article 87(2) and (3) of the

Treaty

(49) Article 87(2) and (3) of the Treaty provides for exemptions
from the general ban on state aid laid down in
paragraph (1).

(50) The exemptions in Article 87(2) of the Treaty do not apply
in the present case because the aid measure does not have a
social character and is not granted to individual consumers,
nor does it make good the damage caused by natural
disasters or exceptional occurrences, nor is the aid granted
to the economy of certain areas of the Federal Republic of
Germany affected by its division.

(51) As regards potential exemptions under Article 87(3) of the
Treaty, it should first be noted that the project was not
carried out in an assisted area pursuant to Article 87(3)(a)
or (c) of the Treaty and is thus not eligible for regional aid.

Research & development

(52) Commission Regulation (EC) No 70/2001 on the applica-
tion of Articles 87 and 88 of the EC Treaty to State aid to
small and medium-sized enterprises, as amended by
Commission Regulation (EC) No 364/2004 (6), extending
its scope to include aid to research and development allows
state aid to be granted to SMEs for fundamental research,
industrial
research and precompetitive development.
Although the measure being examined here was granted
before the entry into force of Regulation (EC) No 364/
2004, Regulation (EC) No 70/2001 as amended is
applicable since, according to Article 9a thereof, individual
aid granted before the date of the entry into force of
Regulation (EC) No 364/2004 in the absence of a
Commission authorisation and in breach of the notification
is compatible with the
requirement of Article 88(3)
common market if it fulfils the conditions laid down in
Regulation (EC) No 70/2001 as amended.

(53) Article 2 of Regulation (EC) No 70/2001 defines funda-
mental research as an activity designed to broaden scientific
linked to industrial or
and technical knowledge not
Industrial research is defined as
commercial objectives.
the
investigation aimed at
planned research of critical
acquisition of new knowledge, the objective being that such
knowledge may be useful
in developing new products,
processes or services or in bringing about a significant
improvement in existing products, processes or services. As
the project in question concerns the development of a
prototype and two installations which will be used in the
production process, it clearly does not qualify as funda-
mental or industrial research.

(6) OJ L 63, 28.2.2004, p. 22.

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(54) According to the same Article, a precompetitive develop-
ment activity is defined as the shaping of the results of
industrial research into a plan, arrangement or design for
new, altered or improved products, processes or services,
whether they are intended to be sold or used, including the
creation of an initial prototype which could not be used
commercially. This may also include the conceptual
formulation and design of other products, processes or
services and initial demonstration projects or pilot projects,
provided that such projects cannot be converted or used for
industrial applications or commercial exploitation.

(55) The Commission notes that the first stage of the project
consisted of the development of a prototype followed by
the development of two installations which were incorpo-
rated into a production process. The setting-up of the latter
two installations does not qualify as a precompetitive
development activity as they were used in production.
Nevertheless, the Commission considers that the develop-
ment of the prototype can be considered to be precompe-
titive development activity. The prototype is part of a
project for an improved production process. It will not be
used in production as it was dismantled in 2003. As regards
the innovative character,
that
according to Germany the developed prototype differs
significantly from machines used in Spain for
the
production of commodity slate which could not be used
for the production of ‘Altdeutsche Deckung’. Moreover,
following the implementation of the project Magog also
acquired patents.

the Commission notes

(56) According to Article 5a (3) of Regulation (EC) No 70/2001,
the maximum allowable aid intensity for
small and
medium-sized enterprises for precompetitive development
activities is 35 % gross of
the eligible project costs.
Article 5a (4) allows an increase of 10 percentage points
if the project's results are widely disseminated through
technical and scientific conferences or published in peer-
reviewed scientific and technical journals.

(57) A part of the results of the project is licensed as patents to
another company. The results of the project also have to be
published in a technical
journal. The Commission thus
comes to the conclusion that a further bonus of 10
percentage points can be added to the aid intensity of 35 %,
which results in maximum allowable aid intensity of 45 %.
As the costs of the prototype amounted to EUR 464 410,
the allowable aid amounts to EUR 208 985.

Investment in tangible and intangible assets

(59) As pointed out above in paragraph 55, the construction of
the installations 2 and 3 which are used for commercial
production cannot be considered to be precompetitive
thus not eligible for R&D aid.
development and is
Nevertheless,
installations
these
construction of
qualifies as investment in tangible and intangible assets
involves a
under Regulation (EC) No 70/2001 as it
fundamental change in the production process of Magog
through the rationalisation and modernisation of
the
existing production process.

the

(60) Article 4 of Regulation (EC) No 70/2001 allows aid for
investment in tangible and intangible assets of up to 15 %
gross aid intensity for small enterprises. According to
Article 2, an investment in tangible assets is defined as
investment in fixed physical assets relating to the creation
of a new establishment,
the extension of an existing
establishment or the engagement in an activity involving a
fundamental change in the product or in the production
process of an existing establishment (in particular through
rationalisation, diversification or modernisation). An
investment in intangible assets means an investment in
the transfer of technology by the acquisition of patent
rights, licences, know-how or unpatented technical knowl-
edge.

(61) The costs of

the installations 2 and 3 amounted to
EUR 733 970. Germany claims that also the costs of stages
2 and 3 and of
tunnelling should be regarded as
investments in tangible and intangible assets within the
meaning of Regulation (EC) No 70/2001 and should be
eligible for aid on this basis.

(62) The Commission considers that the costs relating to the
construction of a hall for the new production process
(point 2 in Table 2), the construction of a sawing machine
for the new production process (point 3), the investments
in water treatment (point 4) and in the office connection
(point 5) indeed constitute investments in tangible assets as
defined by Regulation (EC) No 70/2001. These investments
are part of the project to rationalise and modernise the
production process of Magog and as such are eligible on the
basis of Regulation (EC) No 70/2001. The Commission also
considers that the architect's fee which is linked to the
construction of ‘hall 2005’,
is eligible
because it is part of the costs of ‘hall 2005’. The costs for
the above measures together amount to EUR 522 859.

i.e. EUR 3 600,

(58)

In addition, the feasibility study that was part of stage 1 can
be considered to be a technical feasibility study preparatory
to a precompetitive development activity as defined by
Article 5b of Regulation (EC) No 70/2001 as amended, for
which aid with an intensity of up to 75 % can be granted.
The costs of the feasibility study amounted to EUR 25 565,
which results in an allowable aid amount of EUR 19 174.
The total allowable aid on the basis of Regulation (EC)
No 70/2001 thus amounts to EUR 228 158.

(63) Contrary to Germany the Commission comes to the
conclusion that the remaining costs of stages 2 and 3 and
the tunnelling are not eligible. The investments related to
‘hall 2002’ (point 1 of Table 2) concern the repair and
renovation of an existing sawing hall in 2002 and as such
are mere replacement investments which are not eligible
under Regulation (EC) No 70/2001.

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(64) The digging device is a machine which is used for the
cutting of the slate in the mine (point 6). The Commission
considers that the acquisition of this machine does not
constitute an investment in tangible assets as defined by
Regulation (EC) No 70/2001 but that the costs for the
acquisition of this machine constitute a pure operating
expense. The acquisition of this digging device is not part of
the investment project
to rationalise and modernise
Magog's production process.

(65) As regards the costs for the patents in the form of lawyers'
fee for the notification of the patents (point 7), although
these costs are linked to the rationalisation and modernisa-
tion project, they do no constitute eligible costs under
Regulation (EC) No 70/2001 as they do not fulfil the
condition of an investment in tangible assets.

(66) As regards the costs of tunnelling for the years 2002 to
2005 (point 8) as well as the estimated costs of tunnelling
for the years 2006 to 2007 (point 9), the Commission
these costs constitute normal operating
considers that
expenses and do no qualify as investments in tangible assets
as defined by Regulation (EC) No 70/2001. The same holds
for the costs for project leader and engineer 2004/2005
which are linked to the tunnelling (point 10).

(67) The Commission moreover considers that the costs for the
demolition of the building that were incurred in 2005
(point 11) are not eligible as this demolition is not part of
the investment project to modernise and rationalise the
production process.
Instead it is related to the normal
activities of Magog and as such does not fulfil the definition
of an investment in tangible and intangible assets under
Regulation (EC) No 70/2001. As regards the remaining part
of the architect's fee (point 12) not linked to ‘hall 2005’, the
Commission considers that this measure is not part of the
investment project either as these fees are not linked to any
the
investments
modernisation and rationalisation project.

that are considered to be part of

(68) On the basis of the above the Commission comes to the
conclusion that the total eligible costs for investments in
tangible and intangible assets under Regulation (EC) No 70/
2001 are EUR 733 970 for stage 1 and EUR 522 859 for
stages 2 and 3. They thus amount to EUR 1 256 829 in
total. As the allowable aid intensity is 15 % for small
enterprises, this results in an allowable aid amount of
EUR 188 524 for investments in tangible and intangible
assets.

(69) The Commission considers

that none of

the other
Community guidelines and regulations, such as those for
rescue and restructuring aid, for environmental aid, for
training aid, for employment aid, or for risk capital, could
apply to the case.

with the objective of the protection of workers' health and
safety, as set out in Article 137 of the Treaty. Article 137 of
the Treaty provides that the Community will support and
complement the activities of the Member States inter alia in
the following fields: (a) improvement in particular of the
working environment to protect workers' health and safety
and (b) working conditions. The Commission comes to the
conclusion that the aid cannot be considered compatible on
this basis as the primary objective of the aid was not the
improvement of
to protect
the rationalisation and
worker's health and safety but
modernisation of the production process of Magog. The
fact that the project (as a side effect) also contributed to an
improvement of the working conditions of the employees
as it reduced manual work and noise at the work place does
not invalidate this conclusion.

the working environment

VII.

CONCLUSION

(71) The Commission finds

that Germany has unlawfully
granted aid amounting to EUR 702 093 to Magog in
breach of Article 88(3) of the Treaty. The Commission
considers
that an amount of EUR 416 683 can be
considered compatible with the common market under
Regulation (EC) No 70/2001 (EUR 228 158 for R&D and
EUR 188 524 for investment in tangible and intangible
assets (7). The remaining amount of EUR 285 410 is
incompatible with the common market and has to be
recovered,

HAS ADOPTED THIS DECISION:

Article 1

The state aid amounting to EUR 416 683 which Germany has
implemented for Schiefergruben Magog GmbH & Co. KG is
compatible with the common market pursuant to Article 87(3)
(c) of the Treaty.

Article 2

The state aid amounting to EUR 285 410 which Germany has
implemented for Schiefergruben Magog GmbH & Co. KG is
incompatible with the common market.

Article 3

1. Germany shall take all necessary measures to recover from
the recipient the aid referred to in Article 2 and unlawfully made
available to the recipient.

2. Recovery shall be effected without delay and in accordance
with the procedures of national law provided that they allow the
immediate and effective execution of the Decision. The aid to be
recovered shall include interest from the date on which it was at
the disposal of the recipient's until the date of its recovery.

(70) The Commission also investigated the compatibility of the
aid with the common interest in general and in particular

(7) The figures do not fully add up because of rounding.

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Official Journal of the European Union

L 307/203

3. The interest to be recovered under paragraph 2 shall be
calculated in accordance with the procedure laid down in
Articles 9 and 11 of Commission Regulation (EC) No 794/
2004 (8).

this Decision
4. Within two months of notification of
Germany shall formerly request the aid recipient referred to in
Article 2 to reimburse the unlawful and incompatible aid and the
interest due.

Article 4

Germany shall inform the Commission, within two months of
notification of this Decision, of the measures taken to comply
with it. It will provide this information using the questionnaire

attached in Annex 1 to this Decision.

Article 5

This Decision is addressed to the Federal Republic of Germany.

Done at Brussels, 8 March 2006.

For the Commission

Neelie KROES

Member of the Commission

(8) OJ L 140, 30.11.2004, p. 1.

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INFORMATION REGARDING THE IMPLEMENTATION OF COMMISSION DECISION C(2006) 641

ANNEX

1.

Calculation of the amount to be recovered

1.1.

Please provide the following details on the amount of unlawful state aid that has been put at the disposal of the
recipient:

Date(s) of payment (°)

Amount of aid (*)

Currency

Identity of recipient

(°) Date(s) on which the aid or individual instalments of aid were put at the disposal of the recipient if the measure consists of several

instalments and reimbursements, use separate rows)

(*) Amount of aid put at the disposal of the recipient (in gross aid equivalent)

Comments:

1.2. Please explain in detail how the interest payable on the amount of aid to be recovered will be calculated.

2. Measures planned and already taken to recover the aid

2.1. Please describe in detail what measures are planned and what measures have already been taken to bring about the
immediate and effective recovery of the aid. Please also explain what alternative measures are available in national law
to bring about recovery? Please also indicate, where relevant, the legal basis for the measures taken/planned.

2.2. By what date will the recovery of the aid be completed?

3.

Recovery already effected

3.1. Please provide the following details on the amounts of aid that have been recovered from the recipient:

Date(s) (°)

Amount of aid repaid

Currency

Identify of recipient

(°) Date(s) on which the aid was repaid

3.2. Please attach proof of repayment of the aid amounts specified in the table under point 3.1 above.